HOPES IN THE BALANCE

How much can the Budget do for the rural sector?

- SANJEEB MUKHERJEE & INDIVJAL DHASMANA

In spite of the bonanza from the Reserve Bank of India, which transferred more than double the surplus that was expected in the Interim Budget for 2024-25 (FY25), and the likely slight uptick in tax collections, Finance Minister Nirmala Sitharaman will need to prioritise the demand from the farm and rural sector within the budgetary considerations to stay on the path of fiscal consolidation.

The government has around ₹1.09 trillion more from the RBI transfers than the ₹1.02 trillion pegged from this head and dividends from public sector banks (PSBs). Besides, the government received ₹13,440 crore as dividend from the State Bank of India, Canara Bank, Indian Bank, Bank of India, and EXIM Bank.

Tax revenues, net of devolution to the states, were ₹2,600 crore, higher during FY24 than what was pegged in the revised estimates. And tax collections in the current financial year so far show that there could be a bit of upward revision in the Budget estimates for FY25 in the full Union Budget - to be presented on July 23 - than what was pegged in the Interim Budget, mainly from personal income tax.

Elbow room

Icra Chief Economist Aditi Nayar anticipates an upside of ₹1.2 trillion in tax and non-tax receipts relative to the amount pencilled into the Interim Budget estimates for FY25. Surplus transfers from RBI and dividends from PSBs form part of the non-tax receipts. "We assess a revenue upside of ₹1.2 trillion relative to the Interim Budget Estimates, which is the effective cushion available to the government to expand expenditure without increasing the size of the fiscal deficit," she says.